published: 17.10.2012, 14:32 | updated: 17.10.2012 14:33:33
Prague - The appeals High Court in Prague today upheld the ten year prison sentence for former Harvard Funds president Viktor Kozeny, convicted in absentia of fraudulent trading in securities that caused the damage worth billions of crowns to Harvardsky prumyslovy holding (HPH) in the 1990s.
The court lowered the sentence by one year, to nine years in jail, for Kozeny´s colleague Boris Vostry, who, too, has been prosecuted as fugitive.
Both Kozeny and Vostry are bound to cover the damage of 8.3 billion and 2.2 billion crowns respectively, plus the interests.
In July 2010, the lower-level court sent both Kozeny and Vostry to ten years in prison for causing the damage of 16 billion crowns to the HPH by 110 fraudulent securities deals. Kozeny and Vostry in 1995 and 1996 transferred assets from the Harvard Investment Funds and the Sklo Union Teplice company, by which they harmed the HPH that eventually ended up bankrupt.
The funds then owned shares of 51 percent of Czech companies, including many lucrative and well-doing ones. The shareholders expected their shares´ value to rise, but the fund transferred them, at Kozeny´s initiative, to Cypriot firms whose shares were not publicly traded and became invaluable for the HPH, judge Radek Hartmann said.
Vostry assisted in some suspicious transactions. As the funds´ general meetings chair he withheld crucial information from the shareholders.
He and Kozeny also "pilfered" the funds´ assets by transferring them repeatedly to other companies and back, but for different prices.
Hartmann said Kozeny was a capable manager and economist, who acted with a clear intention. By a massive media campaign he won over a huge number of small shareholders, which enabled him to invest money in the best Czech shares.
Later, however, all promising shares were transferred to companies under Kozeny´s control, Hartmann said.
Kozeny in 2010 said his trial was the opposition Social Democrats´ (CSSD) political attempt to thwart privatisation and destroy hims.
His and Vostry´s defence proposed that the two be acquitted as they committed no fraud.
State attorney Jaromir Jindrich voiced satisfaction with the verdict which, he said, confirmed not only the two men´s guilt but also the correctness of his previous decision to block property worth 700 million crowns in the Czech Republic.
Kozeny got rich within the Czechoslovak coupon privatisation in the early 1990s. In 1990 he established the Harvard Funds to which people massively entrusted the shares they received within the coupon privatisation. Kozeny thus gained control of a large part of the Czech economy. His property reached billions of crowns when he was leaving the Czech Republic in 1994.
In the meantime Kozeny has acquired Irish citizenship and he lives in the Bahamas. He has also been prosecuted in the USA, for suspected bribery linked to oil industry privatisation in Azerbaijan, among others.
Vostry lives in Belize.
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